“I personally believe that this is moving the country in the right direction. And I think we need to put in context the circumstances that we have faced.

“First of all, the President inherited a fiscal disaster. That was not of his making. That was of the previous administration’s making. And he has had to cope with it ever since.

“I am encouraged by the trajectory of the deficit under the President’s proposal from 8.5% of GDP down to 2.8% of GDP at the end of the budget period.

“And again, I think it’s critically important to remember the context within which the President is operating.

“In 2008 and 2009, we experienced the worst recession since the Great Depression. The economy contracted at a rate of almost 9% in the fourth quarter of 2008. Barack Obama was not the President of the United States. We lost 800,000 private sector jobs in January of 2009 – that was not the result of the policies of Barack Obama. And unemployment was surging. A housing market crisis was rippling through the economy with homebuilding and home sales plummeting, and we faced a financial market crisis that threatened to set off a global economic collapse.

“I will never forget Chris [Van Hollen] being called to the Capitol in a fall day and told by the Secretary of the Treasury of the previous administration and the Chairman of the Federal Reserve if action was not taken immediately there would be a global financial collapse.

“Again, Barack Obama was not the President.

“We’ve come a long way since then. The federal response has successfully pulled the economy back from the brink, and I believe President Obama deserves considerable credit for the part he played in that success.

“As I noted in the fourth quarter of 2008, the economy contracted at a rate of almost 9%. Positive economic growth returned in the third quarter of 2009 and we now have had 10 consecutive quarters of positive growth.

“We see a similar picture with respect to private sector job growth. In January of 2009, the economy lost more than 800,000 private sector jobs. Private sector job growth returned in March of 2010 and we’ve now had 23 consecutive months of growth. This is a result of a fiscal policy that got America back on track. It is the policy of President Obama. And he can be proud of it and he deserves a good deal of credit for this recovery.

“We would like to see stronger growth and more job creation. Although unemployment has come down, it is still too high. But the slow pace of this recovery is not unexpected. Economists have found that following recessions accompanied by a severe financial crisis recoveries tend to be shallower and take much longer.

“Looking forward, we need to remember that we really have two major problems facing our country: one shorter term and one longer term.

“Short-term, we are still recovering from the worst recession since the Great Depression. Although the economy is improving, we still have relatively weak demand for goods and services, which is holding back economic growth.

“Longer-term, we face a debt threat.

“Job one is to improve economic growth with steps to strengthen demand. Simultaneously, we need to enact a credible plan to bring down our debt.

“Our Republican colleagues have completely overlooked the first problem of weak demand and would actively make that problem worse by imposing fiscal austerity right now. They have focused solely on the longer-term debt threat. As a result, their policy proposals of imposing fiscal austerity now would only further weaken demand, which would lower economic growth, kill job creation, and choke off the recovery.

“The Republican economic approach suggests the economic recovery is being held back by rising interest rates and that immediate fiscal austerity would address that problem. We don’t have rising economic or interest rates. Interest rates are at a record low.

“You know, often our Republican friends say we ought to listen to the markets. Let’s do that. Let’s listen to the markets. What are the markets telling us? We have record low interest rates. We have weak demand. That tells us we need to take steps to strengthen demand but over time to get back on track in terms of dealing with our debt.

“The problem we have right now, I want to emphasize, is weak demand.

“Another leading economic, Dr. Joel Prakken, the Chairman of Macroeconomic Advisers, described the problem in his recent testimony before the Senate Budget Committee. He stated that the number one problem that small businesses say they have to deal with right now is lack of demand. They do not say access to capital. They do not say the burden of regulation. They say their order books are slim. So let’s pay attention to what the markets are telling us. That is why companies are not hiring as fast as they could be even though they have record profit levels and $2 trillion sitting on their balance sheets.

“We also need to address the second problem of rising debt. We should not wait to respond to that challenge either – but not by imposing fiscal austerity right now – but by adopting a plan that phases in fiscal discipline as the economy strengthen. That has been the testimony of virtually every economic expert before the Senate Budget Committee. The head of the Congressional Budget Office, the chairman of the Federal Reserve, the most distinguished economists in this country warning us don’t impose fiscal austerity right now as the Republicans would or you will kill job creation [or] you will hurt economic growth. But at the same time they say, ‘Yes, we do have the longer-term problem of a debt threat and that has to be addressed as well.’

“We really need an economic two-step. We need short-term strengthening of demand by investments in infrastructure. That will help put people to work and also put us in a competitive position as a country. Second, and simultaneously, we should adopt a credible plan that puts us back on track the long-term fiscal condition of the country. We need to do that by tax reform, by reforming our entitlement programs, and by attacking wasteful spending.

“In his testimony before the Senate Budget Committee last week, Federal Reserve Chairman Ben Bernanke addressed the need for this kind of two-step approach. He said this: ‘Even as fiscal policymakers address the issue of fiscal sustainability, they should take care to not unnecessarily impede the current economic recovery.’

“Fortunately, the two goals of achieving long-term fiscal sustainability and avoiding additional fiscal headwinds for the current recovery are fully compatible. Indeed, they are mutually reinforcing. And I believe that is precisely the balance that the President has struck in this budget proposal.

“To address the short-term lack of demand, the President’s budget includes a number of proposals. These include:

Creating a new tax credit for small businesses that add jobs and increase wages

“Now, I want to address one other canard that I hear repeatedly from our colleagues from the other side. They have said that it’s been more than 1,000 days since the Democratic Senate passed a budget. That is flatly wrong. The Budget Control Act that was passed in August of last year contained the essential elements of the budget for 2012 and 2013. It was passed by the Senate. It was passed by the House. It was signed into law by the President of the United States. It is now the law of the land.

“In many respects, it is stronger than any budget resolution. As you know, a budget resolution never goes to the President for his signature. Let me repeat that. A budget resolution never goes to the President for his signature. It is not the law.

“The Budget Control Act not only passed the House and the Senate, it was signed by the President. It is the law. In many ways, it is more extensive than a traditional budget. Not only does it have the force of law, but it sets discretionary spending caps for 10 years saving over $900 billion. Typically, budget caps are put in place for only one year in a typical budget resolution. Further, it provided enforcement mechanisms including a two-year deeming resolution which improves the enforcement points of budget order and it created a reconciliation-like ‘Super Committee’ process to address entitlements and tax reforms. Unfortunately, that Super Committee did not come to conclusion but it had the opportunity. And it backed that with a $1.2 trillion sequester that is now the law of the land.

“So the fact is we’ve got a budget for this year. We’ve got a budget for next year. It was passed in the Budget Control Act in August of last year with an overwhelming bipartisan vote in the United States Senate, with a strong vote in the House of Representatives, and signed into law by the President of the United States.

“We all know that this is the beginning – this budget proposal of the President. We know more has to be done. But it will require a bipartisan effort. To do more than what the President has proposed will require both sides to come together. We hope that can occur in this budget process.

“But I think we all understand that this is an election year and so trying to come together is especially difficult in that context. But I retain hope. I retain the belief that working together in a good faith basis as we did in the Fiscal Commission and as we did in the Group of 6, we can reach agreement across the aisle.”